Fed Speakers, Trump/Xi Meeting Dominate Week Ahead

Keith Lansford (0:05)

Welcome to the Schwab Market Update Podcast, where we prepare you for each trading day with a recap of recent news and a look at what's ahead.

I'm Keith Lansford, and here is Schwab's early look at the markets for Monday, September 21st. It's a relatively quiet week for data and earnings, but a busy one for Federal Reserve speakers. A host of them are scheduled, possibly shedding more light and providing nuance on last week's rate hike, the first in more than three years. The broader market finished down slightly last week, but the tech-heavy Nasdaq gained. Another highlight ahead is a meeting between President Trump and Chinese President Xi this Thursday. It could put trade back on the menu for the first time in a while, possibly including some tariff reductions, Reuters reported. Volatility has been low despite recent market weakness. That could change this week as position shifting occurs before the end of the quarter in what's traditionally called window dressing season. This is when fund managers shift in and out of stocks near the end of the quarter before sending quarterly reports to clients. They tend to move into stocks that did well during the quarter and shed positions that lost ground. That said, it's been a long time since stocks faced any real moves of note, though the S&P 500 index has generally sagged over the last month and remains down more than 2% from August's all-time high near 7,800. Recent price action has been notably calm, with the S&P 500 avoiding a 1% down day for 36 trading sessions, according to Bloomberg data. Oil prices trimmed their steepest early losses Friday but still finished lower. The move from active trading in the CME's October contract to its lower price November contract helped explain an early drop below $100 per barrel Friday for US futures. The weekend saw worries persisting about Middle East supplies amid continued violence between Saudi Arabia and Iran-backed Houthi rebels in Yemen. Also, US stockpiles dropped last week, surprising analysts. This is the time of the year when oil tends to edge lower due in part to less demand as winter approaches in the Northern Hemisphere. However, prices aren't far below recent five-month highs, leading to pressure on Treasury's Friday. Yields which moved the opposite of Treasury's climbed back to 5% by the end of the week.

The Bank of Japan raised rates last Friday, pushing borrowing costs there to 31-year highs in a fight against inflation. The BOJ hinted more hikes could come, though two policymakers voted against hiking, which might be why the yen fell against the dollar Friday. The dollar index traded above 100 late last week for the first time since late July, lifted by the Fed's rate hike and the yen's weakness. A stronger dollar generally signals more faith in the US economy, which seems resilient. That was evident after strong August retail sales data last week sent the Atlanta Fed's GDP now reading up to a lofty 5.1% for third quarter gross domestic product growth on a seasonally adjusted annual basis from the prior 4.4%.

That's not a forecast, however, but a fluid number that shifts as new data arrives. Most analysts don't expect such hot performance when all the data gets tallied.

Earnings pick up slightly this week with consumer companies at the register. AutoZone, Darden Restaurants and Costco all report. Still, earnings are mainly in hibernation, especially on the tech side where results often affect overall market sentiment. Speaking of which, the latest AAII Investor Sentiment Survey pointed heavily toward the negative side. Respondents who called themselves bearish rose to 53.3%, the highest since May of 2025 This could help explain the recent sharp decline in market breadth. Week ended with only around 30% of S&P 500 stocks above their 50-day moving average.

Data later this week includes new home sales, S&P Global's Purchasing Manager's Indexes, Durable Goods Orders and the University of Michigan Final September Consumer Sentiment might draw the most attention. Today's calendar is blank from an earnings and data standpoint. In other corporate news this week, eyes are on Apple after it officially began selling its iPhone 18 last Friday. This Friday brings final August University of Michigan Consumer Sentiment data with long-term inflation expectations under a microscope. 8 of 11 sectors are down over the last month, and the percentage of S&P 500 stocks trading above their 50-day moving average fell to 28 Friday, the lowest since early April. On a brighter note, the S&P 500's Relative Strength Index, or RSI, bounced off one-month lows near 40 late last week and topped 50, a resilient sign. It's still well below summer peaks, above 70 The Nasdaq, dominated by tech, hasn't made a new high since early June and is down about 2% since then, though it's been stable and trading in a tight range for more than a month. Chip stocks are still trending lower and providing pressure, though last week saw a slight rebound for semiconductors. With tech not contributing, the broader S&P 500 index has faced trouble climbing. Major indexes finished mixed Friday, including gains for the Nasdaq and the S&P 500 index, led by InfoTech and industrial stocks, lifted by AI optimism. Small cap stocks and the Dow Jones industrial average didn't fare as well, with treasury yields rising again. It was the third straight weekly loss for the Dow Jones industrial average. Only four of 11 S&P sectors rose Friday, and utilities brought up the rear. This sector is sensitive to rising yields. The market is fighting seasonal pressure. Late September is traditionally a rough thicket, and lack of earnings removes a possible catalyst. For now, the index's ability to hold the 50-day moving average of 7,615 may be a technical victory of sorts. Checking individual movers Friday, Berkshire Hathaway turned around early losses to gain slightly after 96-year-old Warren Buffett announced he's stepping down as chairman and now will be chairman emeritus. Crypto-related stocks, including strategy and Coinbase, jumped double digits as Bitcoin rose around 6%. The industry strength came after the Securities and Exchange Commission, or SEC, offered an exemption that allows companies to offer trading in blockchain-based or tokenized stocks, Reuters reported. Netflix dropped 4.7% as Wells Fargo downgraded shares to underweight from equal weight and said the company's engagement trends look worrying. Steelmakers Nucor and Steel Dynamics fell 6% and 4% after both issued third-quarter earnings guidance that fell short of consensus. Automakers including General Motors and Ford fell moderately in what appeared to be technical trading. Zenon Pharmaceuticals tumbled almost 31% after a clinical setback in the study of its lead drug for major depressive disorder and bipolar depression, Barron's reported. The company submitted the drug for approval to treat focal seizures. And financial stocks slipped last week, hurt by yield curve flattening in the Treasury market after the rate hike. This type of move in yields tends to hurt bank industry profits.